New Foreign Asset Reporting Requirements
The IRS has launched another initiative designed to get a handle on foreign taxable income. The latest effort is a new form (8938), Statement of Foreign Financial Assets. The form does not appear to be quite finalized, however we expect it to be a required form for 2011 tax returns.
U.S. taxpayers holding foreign financial assets with a total value exceeding either $50,000.00 on the last day of the taxable year, or $75,000.00 at any time during the taxable year, must report quite a bit of information about these assets on the final Form 8938, Statement of Foreign Financial Assets. The form is new, complicated and requires explicit details in order to complete. For the purpose of this form, foreign assets include bank accounts, pensions, land, and virtually anything else. It also applies to things that you own but are not in your name (the popular Mexican real estate entities, for example). The penalty for failure to file an 8938 when required is a whopper and ranges from $10,000 to $50,000, plus 40% of the assets not reported.
Please be sure to bring any foreign assets to our attention when we are completing your returns. If you have any foreign financial assets, call us soon so we may review your facts and circumstances.
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